Weighing the Options of Refinancing

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It has been said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but as refinance costs have been getting lower, it may be time to take a serious look. Refinancing has some advantages that will often make it worth the up-front expenditure many times over.

Advantages of Refinancing

When you refinance, you might be able to lower your interest rate and mortgage payment amount, sometimes considerably. You also might be given the option of tapping into the equity in your house by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage, enabling you to build up your equity quicker.

Fees and Expenses

As you probably expect, you'll have some fees and expenses during the the refinance process. You'll be charged the same sort of fees as with your current home loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might think about paying points to be given a reduced interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the term of the new mortgage can be substantial. Please consult with a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.

An additional cost that a borrower may consider is that a reduced interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 701.222.0100.

Most borrowers find that the savings per month quickly outweigh the initial expenses of a refinance. We'll help you find out what mortgage loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and how refinancing may effect your taxes. Call us at 701.222.0100 to get started.

Curious about refinancing your home? Give us a call: 701.222.0100.

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